There is compelling evidence of society’s beginning to realize the effects of unsustainable development, and project-based flexibility mechanisms such as the Clean Development Mechanism (CDM) are tools that can promote global strategic sustainable development.They are intended to provide financing for sustainable development projects in host nations while generating credits for investors in donor countries, and throughout the process build capacity regarding climate change and sustainable development for project participants (investors and host nations).

The Kyoto Protocol, in order to help industrialized nations (Annex-I) meet their emission limitation and reduction commitments, contains provisions for three flexibility mechanisms: emissions trading (ET), Joint Implementation (JI), and the CDM. We are focusing on the CDM, however it is our aim that the conceptual arguments developed will be applicable to flexibility mechanisms in general.

One objective of the CDM is to assist Annex-I counties in meeting their commitments by allowing investors (typically, but not necessarily, from Annex-I countries) to generate Certified Emissions Reduction credits (CERs) by investing in projects that result in the additional reduction or avoidance of greenhouse gas (GHG) emissions in non-Annex I countries.

Another objective of the CDM is to assist host (non-Annex-I) countries in achieving sustainable development (Article 12.2 of the Kyoto Protocol) through financial assistance and technology transfer.Part of the validation process, outlined in the CDM Modalities & Procedures (Sec. 40 of the Marrakech Accords), requires confirmation from the host countries “that the project activity assists in achieving sustainable development.” However, the protocol does not explicitly define or offer criteria for sustainable development.

There has been criticism regarding the validity, appropriateness and cumbersome process of the CDM and the contribution to sustainable development of the projects it generates.Currently, projects mayhave the potential to move in the wrong direction, lead to blind alleys and/or prove not to be financially viable.Further, according to the UNDP Energy and Environment Group: “as of end 2005, 80 percentof CERs from projects that have reached the registration stage are from 'end of pipe' interventions that generate few or no sustainable development or poverty reduction benefits.”[1] In fact, projects that are not socially or ecologically appropriate may result in unintended adverse impacts.There is potential for these schemes to be abused by project participants and reinforce the negative characteristics of the status quo.

In response to these concerns, some interest groups have called for more stringent sustainability requirements, while investors have found the already highly-regulated process cumbersome and a deterrent to investment.

Proposed Study

In consideration of these criticisms, we believe that a scientific principled definition of sustainability and a generic framework for Strategic Sustainable Development (SSD) that uses backcasting from principles[2] will increase the likelihood that projects will move society towards sustainability.Further, we believe that a framework for SSD can facilitate the CDM process, thereby attracting investment, while also protecting and strengthening the integrity of the system and achieving the primary objectives of the mechanism[3].

We aim to apply a generic framework for SSD to the CDM in order to create a methodology (a ‘guidance system’ towards a sustainable future) using a principle-based definition of sustainability for development projects implemented through the CDM.We believe that the results of this application can inform not only the CDM system, but also other flexibility mechanisms.Our initial sense is that this methodology should:

be non-prescriptive, allowing for creativity within basic constraints;

include the concept of differential diagnosis; and

involve all stakeholders.

In order to create this framework, we will research within the conceptual framework of global governance and flexibility mechanisms through literature reviews, interviews with subject experts and an examination of current CDM projects, and then synthesize this research data with a framework for SSD.

In order to evaluate our ‘guidance system’, we plan to present it to project participants of current CDM projects and potential investors, along with a survey to determine its usefulness.We will also workshop it within the context of a case-study, potentially in Kigali, Rwanda.We will incorporate the results of these workshops as appropriate.A more detailed explanation of the process is provided in the Methodologies section below....